based on my understanding of events that occurred before my time, that the redemption of fund units happened in cash for an amount of US$940 million. However, upon further investigation and verification, it became clear that this was a misunderstanding, which I then clarified to the Board and our shareholder, the Ministry of Finance. This clarification is clearly recorded in subsequent Board minutes and can be verified.
On 13 January 2015, I confirmed via a press statement that the remaining amount of US$1.11 billion had been redeemed, in full. What was unfortunately not made clear, was that the redemptions happened partly in cash and partly through the sale of fund units, with cash payment being deferred. It is this important distinction which caused a misinterpretation of my statement, first during a Business Times interview on 9 February 2015 and subsequently by the Ministry of Finance, in a Parliamentary answer on 12 March 2015.
However, the above explanation smacks of a very patchy cover up to the lies which have been told to the public and the parliament.
Firstly, the minutes revealed that “Mr Arul updated the Board that the balance of US$939,874,085 had been redeemed and had been held as cash since 31 December 2014”.
However Arul will do well to remember that in 1MDB’s email to Malaysiakini 11 January, 1MDB claimed that "The process to do so has already commenced, and we will make an announcement as soon as this has been completed".
How is it that the 1MDB President could inform the Board that the cash, or the mysterious “units” for that matter, is already in the bank since 31 December, when 11 days later he could only tell Malaysiakini that the redemption is in process but isn’t completed?
Secondly, even if we were to give Arul the benefit of the doubt on the excuse of a “misunderstanding”, investment bankers will scratch their heads over Arul’s definition of an investment “redemption”. The financial community would understand the “redemption” of an investment fund be in the form of “cash” or its underlying assets, e.g., shares of a particular company or titles to specific properties. What in the world is a redemption via “the sale of fund units”?
If they are still in “fund units”, it means that the investment fund hasn’t been redeemed. If they have been redeemed, how could they still be in the form of undefined “fund units” of indeterminate value?
Finally, the nail in the coffin to prove that Arul Kanda did indeed knowingly lie to both the press and the Parliament via the Minister of Finance is that he gave very specific reasons why these redeemed cash and/or “fund units” were not repatriated to Malaysia.
Besides telling the Singapore Business Times on 9 February 2015 that “the cash is in our accounts and in US dollars. I can assure you (about that)... I have seen the statements”, Arul also said that 1MDB is “keeping the money in US dollars as we have US$6.5 billion in bonds out there, in which interest payments come up to nearly US$400 million a year.”
The Finance Minister’s 10 March 2015 parliamentary reply to me further added
Keputusan untuk menggunakan Bank di Singapura bertujuan untuk memudahkan urusan pengeluaran wang memandangkan peraturan yang ditetapkan oleh Bank Negara Malaysia (BNM) memerlukan kelulusan BNM diperoleh bagi setiap transaksi wang melebihi RM50 juta.
However, the exposed minutes of meeting in January proved that the real unrevealed reason for failing to repatriate the money was because the proceeds to the Cayman Islands fund were already pledged, without prior knowledge of the Board of Directors, to Deutsche Bank for a US$975 million loan.
The minutes specifically noted that “Mr Arul said that he had had a discussion with DB on the possibility of repatriating the proceeds. DB advised that they were unable to accede, given recent negative reports on the Group, and their concern over the recoverability of the US$975 million loan granted.”
Hence Arul Kanda cannot feign ignorance or claim innocent “miscommunication” or “misunderstanding” when he told the Singapore Business Times or the Parliament the above fictitious reasons or excuses for not repatriating the funds back to Malaysia.
The 1MDB President should stop telling more lies to cover up lies to cover up the multi-billion ringgit shenanigans in the state owned company. While the embezzlement and misappropriations clearly took place before he became the President of the Company, his continued attempt to protect the guilty parties with lies and half-truths will make him complicit in the entire scam.
To prevent further untold surprises from turning up on whistle-blower sites, I call upon Arul Kanda to make public all the Board Meeting minutes, particular for the meetings held after he was appointed the President of 1MDB.